The figure above shows Cindy's demand for CDs per year
a. What is Cindy's consumer surplus on all the CDs consumed if the price of a CD is $12?
b. What is Cindy's consumer surplus on all the CDs consumed if the price of a CD is $9?
c. What happens to Cindy's consumer surplus when the price of a CD falls?
a. Her consumer surplus when the price of a CD is $12 equals $15, the area of the triangle under the demand curve and above the price.
b. Her consumer surplus when the price of a CD is $9 equals $60, the area of the triangle under the demand curve and above the price
c. As the price of a CD falls, Cindy's consumer surplus increases. This result reflects the observation that consumers are better off when prices are lower.
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